I have represented investors since the mid-1970s, when claims under federal and state securities laws were not required to be arbitrated even though arbitration clauses were contained in customer agreements. The playing field was a more level one in court, in no small part because there was no way one-third of the jury would come from the securities industry.

Although many industry arbitrators I have encountered have been fair to investors, the current arbitrator appointment and selection process does not assure that fair and unbiased industry arbitrators appear on every list or that respondents won't strike them. Moreover, even the most well-intentioned industry arbitrator can understandably become defensive in cases in which practices of firms similar to his or her firm's practices are challenged.

Where an investor doesn't get the result he or she desired, there is no way to overcome the suspicion that the industry arbitrator exercised undue influence on the outcome. The arbitration is run by an industry group in the first place and investors understand that they're being forced to arbitrate in the industry's home court. Having said that, there are positive aspects of FINRA arbitration, including cost and efficiency. If the industry arbitrator is no longer mandatory, some of the actual and perceived unfairness of the process will be eliminated.

This proposed rule change is supported not only by investors and their lawyers, but by industry groups as well. It should be approved.